Recent legislative changes have clarified how gift cards (including Prezzy cards) are treated for tax purposes. If your business provides staff with gift cards as rewards or incentives, please note the following:
- Taxable Benefits: Gift cards are now clearly treated as taxable fringe benefits and are no longer eligible for the "$300 minor benefits" exemption.
- FBT vs. PAYE: You now have the flexibility to either apply Fringe Benefit Tax (FBT) or treat the benefit as employment income through the PAYE system. Select the method that is most cost-effective and efficient for your business; however, whichever you choose must be applied consistently.
- Exceptions: If the gift card is clearly a substitute for wages, it must be treated as employment income through the PAYE system.
- Effective Date: While these changes were introduced in early 2026, they apply retrospectively from 16 April 2025 to resolve previous uncertainty.
Quick Summary of Treatment Changes
| Scenario |
Previous Treatment |
Current Treatment |
$200 Prezzy card
(Christmas) |
Often FBT-free |
Taxable (FBT or PAYE) |
| $300 retail gift card |
Often exempt |
Taxable from first dollar |
| Gift card in place of bonus |
PAYE |
Still PAYE |
The transition to these new tax rules can be complex. If you would like advice on whether FBT or PAYE is the most efficient route for your business, please contact our team to schedule a brief consultation.